Exciting new opportunities emerge, but it’s business as usual at waterfront trust

With big privately-funded waterfront projects on the horizon, it appears council supporters of the Hamilton Waterfront Trust are determined to continue to find ways of keeping the insolvent organization alive long enough to catch the next wave of development.

The Hamilton Waterfront Trust has submitted a request to the City for $1 Million to improve lighting and sound systems at the Pier 8 ice rink and to begin some servicing on the rest of Pier 8. This comes on the heels of an announcement that the City and the Hamilton Port Authority have come to an agreement that will see the portion of Pier 8 at the foot of John Street that was occupied by the Port, now turned over to the city.

A staff presentation last month suggests Hamilton is now on the verge of being able to develop the entire west Harbour area, including the remainder of Pier 8 and the Barton-Tiffany area, creating an important node of upscale living, shopping and recreation.

The planning document known as Setting Sail recommends that development in both areas be a mix of medium density residential and commercial. According to City staff, it is expected that the kinds of residential and commercial developments that can now take place on Pier 8 and on Barton Street will involve partnerships with the development community.

Standing in the wings, it is reliably reported, are major developers with deep pockets who might be interested in going beyond the ambitious Setting Sail concept, and actually tackle development of the CN rail yards, or at least the air rights. But a project of that magnitude is way down the road and would probably require significant land assembly to accommodate relocated rail switching facilities. In the middle of all this is the Hamilton Waterfront Trust — the agency founded in 2002 with a mandate to “connect Hamilton to the water.” The trust has redeveloped the west side of Pier 8 with the installation of the Williams Coffee Pub and subsequent expansion; the takeover of the former Discovery Centre and its transformation to a restaurant; the construction of a skating rink, and several kilometres of waterfront trails.

[box type=”info” align=”alignleft” width=”300″ ]But in accomplishing what is admittedly an impressive record of providing waterfront amenities, the HWT has engaged in questionable financial and governance practices; has incurred and concealed large financial losses; and has dealt with funding partners, including the City of Hamilton in a less-than–transparent manner. The question now, with the City coming into the picture in a lead role, and the certain involvement of developers who will be putting their own money at risk; is there a significant role for the Hamilton Waterfront Trust in this next phase of development? Will private developers who will putting up serious money want to be involved with a trust that is closely controlled by politicians and has been used to operating for most of its existence without oversight or accountability?[/box]

For the last several years the Waterfront Trust has been bleeding money on the commercial operations it had set up with some of the $6.3 Million with which the trust was endowed as part of the deal that ended the lawsuit between the City and the old Hamilton Harbour Commission. In the last 4 years HWT has lost almost $2Million. Recently the HWT released a report describing how the organization had been forced to pay a $323,000 reassessment of HST payments. The problem was blamed by HWT member Tom Jackson on a former staffer he described as a “glorified bookkeeper.” This wasn’t the first GST problem. In 2005, there was also an unreported GST reassessment that cost the HWT $131,000. The agency appears to be surviving on administration and design fees charged to the City on projects such as building the outdoor rink, additions to the Williams Pub and renovations to the Discovery centre.

From March 2012 to March 2013 the city paid the Waterfront Trust more than $182,000 in administration fees. But it appears the fees are another example of the HWT using its political pull to get around the rules. The Bay Observer asked city finance staff when city Council approved the administration fee structure and were told that the payments “were never directed by council,” suggesting that the payment arrangement was arrived at as a result of some informal agreement between HWT staff and city finance staff.

The question is, given the well-known climate of intimidation of staff at Hamilton City Hall; would anybody be crazy enough to embark on such an unusual course without a tacit sense that it was ok politically. Whenever the Waterfront Trust has been challenged; as it was in two recent incidents —one involving Mayor Bob Bratina and one involving citizen activist Gary Santucci —council has been unanimous in slapping down threats to the HWT. The City has found other ways of assisting the Trust with its finances. In 2011 the city purchased an $80,000 Zamboni from the Trust, a year after it had provided the HWT with funds to purchase the machine in the first place — effectively paying for the Zamboni twice. To date there has been no verification of the actual amounts the HST spent on the various construction projects it undertakes on a sole-source basis with the City.

In the case of the addition to the Williams Restaurant and the skating rink, Council was shown a one line entry estimating the cost at $3 Million and approved it without discussion. The city provided the HWT with an up-front payment of $300,000 and replenished the float with periodic up front payments ranging from $400,000 to $550,000. To trigger a new payment the HWT would submit an invoice briefly describing work undertaken but providing no backup for amounts actually spent. In a previous edition, the Bay Observer showed how $400,000 was added to the Beach Trail project, which was completed under budget, allowing the HWT collect the full budgeted amount from the City and a provincial waterfront trail agency.

Former City Finance Chief Rob Rossini told the Bay Observer that HWT is not asked to submit proof of payment to suppliers, because this is standard practice with city departments like Public Works. The problem is that the Hamilton Waterfront Trust is not a city department and is not subject to internal audits the way city departments are. Effectively the Trust submits the estimates on which council votes funds, then performs the work without competitive tender, and submits unverified invoices for payment. Yet Revenue Canada in a document summarizing the history of the Discovery Centre lands which the Government leases to the HWT; made it clear it expected there should be city oversight of and past and future HWT construction activity on the property: “The City is required to give approval of site plans as well as building plans and approval. The City provided the funding ($4.3 Million, with a million more to come for the rink and Discovery Centre work) only upon submission of a statement of expenditures by the Trust. Documentation to support costs incurred by the trust had to be available to City auditors.”

The preamble to last week’s request for an additional $1 Million for the rink and Pier 8, contains a clause calling for detailed verification of costs but that is something new; and only came after the Hamilton Waterfront Trust had received over $15 Million for construction projects from the city and other funders, without anybody verifying the actual cost of any the projects. Undeterred, the HWT is now calling for requests for proposals to add three more buildings to the property adjacent to the Discovery Centre and rink.

John Best had enjoyed a lengthy media management career, in television and radio and now print. As Vice President, News at CHCH in Hamilton, John oversaw a significant expansion of the news operation. He founded Independent Satellite News, Canada’s only television news service providing national content to Canadian independent TV stations. John is a frequent political commentator on radio and television, a documentary producer and author of a book and numerous articles on historical and political subjects. John is a past recipient of the New York Festival’s award for writing in the International TV category.